Thats the nuts of it. The loans where then bundle into packages known as collateral debt obligation etc and given a AAA by Standard and Poors, which were then insured by bond insurers. Standard and Poors were more than happy to give these ludicrous ratings because it represented a whopping 40% of their business.
The idea of selling the loans on was to minimze losses by dispersing the risk. It certainly dispersed the risk, but it didn't minimize it. The whole thing was built on the spurious basis that debt could increase exponetially as long as property prices did as well. On Oct 25, 2:00 pm, Maax Well <[EMAIL PROTECTED]> wrote: > The way I understand it is that what they allowed the banks to do was > sell off the loans to any speculator that was interested. The loans > were being sold all over as excellent risk loans. In the good old > days, the banks loaned the money and were stuck with it until it was > paid back. They had an incentive to make absolutely sure the loans > were quality. Once the "barriers were down" they could write a piece > of crap contract and pass it off to some poor investor before the ink > was dry. How many people have you heard say before they made their > first payment the payee had already changed. We all know how easy > they were making the loans to get, right? > > That is very simple way to put it, I am sure there are many in this > group that could offer better details. > > On Oct 24, 12:09 pm, Zebnick <[EMAIL PROTECTED]> wrote: > > > > > Thank you for all the little stories, but tell me specifically how the > > Gramm Leach Act caused the mortgage meltdown. And not just with > > statements like "it broke down barriers." How would these broken > > barriers CAUSE the meltdown? > > > On Oct 24, 8:08 am, studio <[EMAIL PROTECTED]> wrote: > > > > On Oct 24, 1:40 am, Zebnick <[EMAIL PROTECTED]> wrote: > > > > > You don't know what you'retalking about. If you think youdo, > > > > identify what was deregulated and how, specifically, it caused the > > > > mortgage meltdown. > > > > Give me a break. > > > Look, if youhavea deregulated quasi-government agency handling a > > > trillion dollars...it begs for trouble. > > > > Any competent analyst coudhavetold you from the beginning such > > > a thing won't work in the long term without being highly regulated. > > > > But it's worse than that...they knew it wouldn't work. > > > So who gets manipulated like a puppet by both major parties? > > > Everyone. > > > --- > > > > The 1999 Gramm-Leach-Bliley Act broke down barriers between banks, > > > securities firms, mortgage lenders and insurance companies. > > > That deregulation repealed Great Depression-era bank regulations with > > > the approval of former president Bill Clinton. > > > > Robert Rubin and Larry Summers, former U.S. Treasury secretaries > > > under Clinton, supported the bank deregulation bill in 1999. > > > > McCain voted for the first version of the Gramm bill in 1999 but did > > > not vote on the final measure. Biden voted against the initial bill > > > but > > > for the final product. > > > >http://www.bizjournals.com/phoenix/stories/2008/09/15/daily81.html > > > ---- > > > > You know things are very very bad on Wall Street when a guy like > > > Henry Paulson -- Treasury secretary, solid Republican, and former > > > Goldman Sachs CEO -- joins the crowd calling for more regulation > > > over the financial markets. > > > > "Regulation needs to catch up with innovation," Paulson said, and > > > he was backed up by the rest of President Bush's working group > > > on financial markets, including Federal Reserve Chairman Ben > > > Bernanke and Securities and Exchange Commissioner Chris Cox. > > > Not a commie among them. > > > >http://www.marketwatch.com/news/story/paulsons-lament-deregulation-ha...{4AEF15AC-3966-4656-8108-C96712A88D68}- > > > Hide quoted text - > > > - Show quoted text -- Hide quoted text - > > - Show quoted text - --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more. -~----------~----~----~----~------~----~------~--~---
